“A Reverse Nirvana Fallacy” – Dionne Award

A prolific author appointed to the 7th Circuit Court of Appeals by Pres. Ronald Reagan in 1981, Judge Richard Posner is a leading exponent of the law and economics school of thought headquartered at the University of Chicago Law School where Posner has taught for over 40 years. Whoever is your image of a mushy-thinking, bleeding-heart liberal…Posner is pretty much the opposite.

It’s partly because of Posner’s record and (well-deserved) reputation that he is today’s winner of the Dionne Award, named for Washington Post columnist E. J. Dionne and given at the whim of this blog to a “habitually even-tempered and fair-minded commentator for excellence in expressing moral outrage”.

Posner posted the award-winning essay earlier this month on the blog he co-authors with economist and colleague Gary Becker as part of a dialogue between the two on the subject of capitalism. Posner minces no words in criticizing Alan Greenspan and like-minded economist who embraced a “reverse Nirvana Fallacy…the idea that capitalism was a self-regulating system”. Such thinking, Posner maintains, “influenced the regulatory laxity that contributed (decisively in my view) to the financial collapse of September 2008 and the ensuing worldwide depression”.

“Greenspan and other like-minded economists and political leaders were wrong to think capitalism self-regulating; they neglected the need for an institutional structure, and a culture, that differentiate successful from unsuccessful capitalist economies.

The institutional structure of the United States is under stress. We might be in dangerous economic straits if the dollar were not the principal international reserve currency and the eurozone in deep fiscal trouble. We have a huge public debt, dangerously neglected infrastructure, a greatly overextended system of criminal punishment, a seeming inability to come to grips with grave environmental problems such as global warming, a very costly but inadequate educational system, unsound immigration policies, an embarrassing obesity epidemic, an excessively costly health care system, a possible rise in structural unemployment, fiscal crises in state and local governments, a screwed-up tax system, a dysfunctional patent system, and growing economic inequality that may soon create serious social tensions. Our capitalist system needs a lot of work to achieve proper capitalist goals.”

There’s much talk on the left these days about what it will take for “the fever to break” (to use Pres. Obama’s words) in today’s extremist, uncompromising Republican Party. One necessary element (in this blog’s humble opinion) is for prominent, influential and powerful conservatives like Judge Posner to break publicly with the extremist Republican agenda simply by calling it what it is and apportioning blame (as for the 2008 financial collapse and ensuing depression) for its failings. More like this, please!